Price Level Adjustments

Price level adjustments are changes made to financial figures to account for inflation or deflation over time. They help compare amounts from different periods by removing the effect of rising or falling prices, providing a clearer view of true value or real growth. For example, adjusting historical income figures for inflation allows you to see if earnings have genuinely increased or if it just appears that way because of changing price levels. This process ensures more accurate comparisons across different timeframes by reflecting consistent purchasing power.